SALEM, Ore. (AP) — Medicaid payments to hospitals and health care providers in Oregon will be cut starting July 1 under a plan released Wednesday by lawmakers.

The state's Medicaid program, known as the Oregon Health Plan, covers about 585,000 Oregonians. Under lawmakers' plan, payments to providers will be cut by 11.5 percent, instead of 19 percent as proposed in the governor's 2011-2013 budget.

Hospitals will pay a 1.69 percent tax increase on their total revenue under the plan. That money — an additional $260 million over two years — will be extra revenue that can be matched by federal funds for a total of $660 million.

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